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existence of which is in doubt in light of 2618's lease of its
furniture, furnishings, fixtures and all leasehold improvements
from petitioner). So-called “other assets”, described on a
schedule attached to the return as “FIT deposits” ($3,866) and
“Bond Sales Tax” ($675), appear to be prepayments of anticipated
liabilities that one would expect to continue for the benefit of
JKP. Even if all or a portion of the $21,352 in cash listed on
the 1989 return balance sheet remained in November 1990, it is
more likely to have gone to JKP in order to satisfy its current
operating needs (the 1989 return balance sheet listed $17,490 in
accounts payable and $10,633 in other short-term obligations)
than to petitioner.
We find that respondent’s speculation that the assets listed
on the 1989 return balance sheet remained in existence and were
distributed to petitioner some 10 months later is implausible,
and we find, based upon the evidence before us (including
petitioner’s uncontradicted testimony), that petitioner received
none of the assets listed on the 1989 return balance sheet in
connection with the November 1990 transfer of the club from 2618
to JKP. Therefore, we reject respondent’s argument that
petitioner was in receipt of a distribution taxable under section
356(a)(1)(B) and (2).
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